ATUL CHANDRAKANT KIRLOSKAR,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 14, PUNE

ORDER

PER PARTHA SARATHI CHAUDHURY, JM:

2. The solitary grievance of the assessee, in this appeal is the addition of Rs.16,89,243/- to the Income from House Property by the Assessing Officer(AO) and as sustained by the ld.CIT(A). The relevant facts in this regard are that during the year under consideration i.e. F.Y.2013-14 relevant to A.Y. 2014-15, the assessee has shown House Property Income from property at Sindh Society, Pune for Rs.5,500/- for the entire year. Property was let out to the Daughter of the assessee Ms.Gauri Kirloskar. Further, on perusal of computation of income for the A.Y. 2013-14, it was noticed by the AO that the same House Property was let out to Volkswagen India Pvt. Ltd., A.Y. 2014-15 Atul Chandrakant Kirloskar (A) for a period of Six Months and the total rent received was Rs.11 lakhs which was discontinued during the F.Y. 2013-14. Therefore, according to the AO, the Annual Let out Value[ALV] of the Property should be Rs.22,00,000/- per annum. The fact emerged that the property of the assessee at Sindh Society, Pune, was rented out for Rs.22 lakhs for 12 months during F.Y. 2012-13 relevant to A.Y.2013-14 to Volkswagen India Pvt. Ltd., though the actual rent received was Rs.11 lakhs for Six Months. The AO noticed, therefore that for F.Y.2012-13 relevant to A.Y.2013-14, the said House Property was let out for Rs.11 lakhs to Volkswagen India Pvt. Ltd., whereas the same property was let out in the F.Y. 2013-14 relevant to A.Y. 2014-15 to the Daughter of the assessee at a very paltry and meagre amount of Rs.5,500/- per annum. The AO further noted that as per market rent, the rent is increased every year @10% normally of the previous year. In this factual backdrop by comparing the said property let-out in the previous year and the trend of the market, the ALV of the property was estimated at Rs.24,20,000/- for the F.Y.2013-14 relevant to A.Y. 2014-15 and the Income from House Property was worked out making of addition of Rs.16,89,243/- to the total income.

A.Y. 2014-15 Atul Chandrakant Kirloskar (A) observed that the AO has computed ALV on the basis of actual rent received by the assessee for Six Months during the A.Y.2013-14 for the same property. It was further observed that though the assessee had submitted relatable value from the Municipal Authorities of Rs.6,140/-, which is lesser than the Actual Rent received for the F.Y. 2012-13 relevant to A.Y. 2013-14, it would not apply to the case of the assessee since already Assessing Officer considered that assessee received actual rent in the just preceding year at a higher amount.

Tiptop Typography (supra). We have gone through the orders of the Sub- ordinate Authorities and we find that the ld.CIT(A) has given a very categorical findings as to the entire facts and circumstances and the legal provisions applicable to the case of the assessee. It is an undisputed fact that for F.Y. 2012-13 relevant to A.Y. 2013-14, the same property of the assessee fetched a rent of Rs.22 lakhs per annum with the actual rent received of Rs.11 lakhs for Six Months from Volkswagon India Pvt. Ltd. We find that same property was let out to the Daughter of the assessee in F.Y. 2013-14 relevant to the present Assessment Year under consideration for a meagre amount of Rs.5,500/- per annum as rent. The assessee was neither able to explain such disproportionate amount in rent received neither before the Sub-ordinate Authorities, nor before this Tribunal. The ld.AR of the assessee was repeatedly saying that it is for the AO to prove why there has been such discrepancy in the rent amount. The legal scenario is very clear that once such a discrepancy has been demonstrated and examined by the Department, the onus is on the assessee to establish the reasons for such disparity in rental income. The AO has not considered any outside property comparable rents nor has taken into consideration any other extraneous circumstances, but has only considered the disparity of rent in assessee’s own property, on one hand what he had received during the A.Y. 2013-14 and on the other, what he has received in A.Y. 2014-15. It is the duty of the assessee to explain this disparity with possible reasons and materials on record, otherwise, the tax levied on such income is definitely justified. Even the Hon’ble Jurisdictional High Court decision (supra) at para 47, it is observed and opined that “the satisfaction of the Assessing Officer with the bargain reveals that inflated or A.Y. 2014-15 Atul Chandrakant Kirloskar (A) deflated rate based on fraud emergency relationship and other consideration makes it unreasonable must precede the undertaking of the above exercise”. Therefore, in our considered view, the Subordinate Authorities have well examined that because of the relationship factor between the assessee and his Daughter out of natural love and affection, the value of rent was determined at such a lesser amount of Rs.5,500/- per annum, whereas the same property was rented out to a third party in just the preceding A.Y. 2013-14 for a much more higher value, therefore, it is nothing but the relationship aspect which has reduced the rent of the property and it has been well explained in the respective orders of the Subordinate Authorities. As already observed, the dis-proportionate rental income received on one hand from a third party and on the other from his own Daughter were examined by the AO in relation to the same property of the assessee and therefore the order of the AO has been upheld by the ld.CIT(A). Therefore, on totality of the facts and circumstances, we do not find any reason to interfere with the findings of the ld.CIT(A) which is upheld. The grounds of appeal of the assessee are dismissed.